Metaverse Is Providing Opportunities For Both Its Users And The Virtual Economy To Proliferate

ByBit Analysis 29.11.2022 13:34
The metaverse has transitioned from fiction to reality virtually right before our eyes. Metaverse Index stands poised to capitalize on the excitement surrounding this growing trend. By providing traders with exposure to several tokens rather than just one, Metaverse Index has forged a novel way to participate in the expanding metaverse and profit from the rise in virtual economies as a whole. In this article, we dive deep into MVI (Metaverse Index) to explain what it is, how it works and where its average price is expected to go today, tomorrow and a decade from now.
What Is Metaverse Index?
Metaverse Index is a cryptocurrency index product consisting of a basket of tokens designed to track social, economic, business, entertainment and sporting trends as they shift toward virtual environments.
The metaverse is a boundless interactive cosmos that’s designed to provide opportunities for both its users and the virtual economy to proliferate and flourish. Investing in the metaverse can be done in any number of ways, the most common one being the purchase of The Sandbox, Enjin Coin and other metaverse-related tokens. However, much as savvy investors choose ETFs and index funds that track the S&P and other stock markets for relatively stable long-term gains, investors can take the same “basket” approach with the metaverse and crypto markets by investing in Metaverse Index, or MVI.
Introduced by Index Coop in 2021, Metaverse Index is a liquidity-adjusted, root capitalization–weighted index, developed to capture and capitalize on the increasing trend shift toward virtual reality via its MVI token. This ERC-20 token represents the index, which is a collection of various Ethereum-based tokens chosen according to a strict set of metrics.
In other words, Metaverse Index aims to tokenize the virtual worlds of the metaverse by providing a single investible token, MVI. Representing 16 tokens tied to the metaverse in one form or another, MVI can be viewed as a representation of the strengthening or weakening of virtual reality and crypto trends.
Rather than forcing investors to place all of their hopes on the performance of a single token, Metaverse Index allows them to spread their risk across several tokens and potentially profit from their cumulative overall performance. As such, MVI and other metaverse index funds, such as DeFi Pulse Index, can be viewed as viable entry points for metaverse newcomers.
What Is an Index Fund?
Metaverse Index is one of many products developed by Index Coop, a DAO specializing in the creation of cryptocurrency index tokens. Crypto index funds (tokens), such as Metaverse Index, provide traders with broader exposure to crypto markets, the metaverse and specialized industry segments, allowing them to engage in trading in a simpler, more streamlined fashion.
Index Coop offers a number of different index fund tokens. Tokens for each index are selected according to specific criteria. The Metaverse Index fund captures 16 metaverse-related tokens, including Enjin Coin (ENJ), Illuvium (ILV) and Decentraland (LAND), among others. By grouping these tokens into one single token in the form of MVI, Metaverse Index aims to offset the volatility inherent to investments in individual tokens.
In addition to greatly minimizing volatility, an index fund also greatly reduces gas fees, commissions and trading fees for stocks and traditional investments. Rather than paying fees for each individual token, traders can maximize profits by paying much less in fees for the same amount of exposure.
This is the beauty of index funds. By allowing traders to invest in baskets of tokens, stocks or other securities, they minimize the risks and volatility associated with trading individual assets, while simultaneously creating savings in the form of fewer gas or trading fees.
Considering the significant short- and long-term growth forecast for the crypto/DeFi/metaverse space, it’s a win-win, depending on the tokens selected for the fund. Index funds take market capitalization, liquidity history, security features and more into consideration when deciding which tokens they’ll include.
Origin of Metaverse Index
Metaverse Index was launched in 2021 by Index Coop, short for Index Cooperative, as a means for traders and investors alike to profit from the rise in metaverse popularity as it continues to permeate all aspects of society and create new cultural norms.
With the financial backing of Sequoia Capital, White Star Capital, Blockchain Ventures and other venture capitalists, Metaverse Index was collectively launched by Index Coop’s founders, without any third-party involvement.
How Does Metaverse Index Work?
Since the Metaverse Index token is an index fund product, it has no tokenomics or issuance/supply schedule, as typical tokens on the crypto market do. The token represents not one, but an assortment of 16 tokens with varied allocation. Let’s take a look at how it works.
Constituent Weighting
The folks at Index Coop use constituent weighting when selecting which tokens to include in the Metaverse Index fund. This means each individual token (constituent) in the fund is weighted according to its market capitalization. The weighted aggregation of all constituent prices is used to help calculate MVI’s value.
Each constituent must meet certain requirements regarding market exposure, market capitalization and liquidity in order to be selected for the index. The basic criteria include:
The token must exist on the Ethereum blockchain, and have consistently reasonable DEX liquidity on Ethereum as well.
Total market capitalization must exceed $50 million.
Protocol must belong to the NFT, VR, Entertainment or Music category on CoinGecko.
Protocol must have a minimum of three months of operational, price and liquidity history.
Token must undergo and pass an independent security audit.
Index Calculation
Metaverse Index uses a combination of liquidity weighting and root market cap to determine the final index weights.
For all of the math lovers out there, here is the formula:
TW = (75% × RMCW) + (25% × LW)
TW = token weight
LW = liquidity weighted allocation
RMCW = square root of market capitalization–weighted allocation
Index Maintenance
Metaverse Index is maintained every three months in two separate phases, the determination phase and the rebalancing phase.
During the first phase (determination phase), the protocol must be listed as belonging to specific token categories on CoinGecko. Once the outcome of the determination stage is published, and the token has been confirmed as belonging to an appropriate category, the index will enter the rebalancing phase where the index composition will change to reflect the new weights.
The change in weighting as a result of this maintenance is reflected during the following quarter.
Which Tokens Are Included in the Metaverse Index?
The investment universe of Metaverse Index includes a variety of tokens within CoinGecko’s NFTs, entertainment, music, augmented reality and virtual reality categories, each one with at least 90 days of trading history and a market cap of $50 million or more. The following is the complete list of tokens that meet these requirements and are included in the Metaverse Index.
Audius
Audius is a music streaming blockchain protocol designed to bridge the gap between content creators and their fans.
Axie Infinity
Axie Infinity is a popular game leading the play-to-earn (P2E) revolution. The game’s governance token is AXS.
Decentraland
Decentraland is the very first completely decentralized metaverse universe. MANA is the native currency used throughout the game.
Decentral Games
Decentral Games is a metaverse casino located within Decentraland that players can own and operate via the DG governance token.
Enjin
Enjin is an important piece to the Metaverse Index puzzle. Its utility token, ENJ, is responsible for driving Enjin’s NFT economy, and within Enjin’s ecosystem, businesses can use ENJ to develop and monetize gaming NFTs.
Ethernity Chain
The Ethernity Chain token (ERN) is used to farm rare, limited-edition trading cards and NFTs created by popular NFT artists on the community-oriented Ethernity Chain platform.
Illuvium
Illuvium is a well-known metaverse gaming system that’s based on the Ethereum blockchain. At the moment, Illuvium is working on what many expect to be the very first truly playable AAA metaverse game project — one that includes a 3D virtual reality setting, with over 100 Illuvials sprinkled throughout the virtual cosmos.
NFTX
The ERC-20 protocol known as NFTX is used for creating tokens backed by a variety of NFT collectibles, resulting in instant liquidity for an asset class with well-known liquidity issues. NFTX is the governance coin that allows new proposals to be voted on by token holders.
Rally
The Rally network is powered by the RLY Ethereum token, giving token holders the ability to collectively create cryptocurrencies known as social tokens, and launch them on the crypto market. With Rally, creators can unlock new revenue streams while giving fans access to merchandise, unreleased content and several other benefits.
Rarible
Rarible is a popular NFT marketplace included in the Metaverse Index. With Rarible, virtually anyone can buy, sell and mint one-of-a-kind digital goods like game items, artworks and collectibles. Using the RARI governance token, community members can participate in the governance of the Rarible marketplace and treasury.
REVV
REVV is an Ethereum-based token used to support P2E motorsport blockchain games, like F1 Delta Time (now closed), Formula E, MotoGP™ and other titles developed by Animoca Brands.
The Sandbox
As its name suggests, The Sandbox is a community-centric metaverse network where anyone can develop and monetize on-chain games using voxel NFT assets. The vibrant gaming economy of The Sandbox is a top performer in driving the average price of MVI and a major contributor to the gaming industry.
Terra Virtua Kolect
Virtua is an immersive platform where collectors can purchase and display digital collectibles in the virtual reality space known as the “Fancave.” The utility token for the platform is TVK, Terra Virtua Kolect, which collectors can use to participate in the thriving collectible economy, unlock extra features and earn additional rewards.
WAXE
WAXP is the utility token for the WAX protocol, an e-commerce blockchain built to facilitate NFT value transfer. Partnering with Atari and other major gaming studios, WAXE (the Wax Economic Token converted from WAXP) currently plays an integral role in the Metaverse Index, and has growth potential.
Whale
WHALE is a virtual social currency backed by some of the rarest NFTs and digital assets on the market. The basket of NFTs supporting the currency include rare digital assets from Avastars, Gods Unchained, Cryptovoxels and several other coveted digital art.
Yield Guild Games
Yield Guild Games is a DAO that uses the YGG governance and utility token, which can be staked for specific rewards and used to pay for transactions within the Yield Guild Games community.
Buying MVI vs. Individual Tokens
The metaverse is an open digital space designed to seamlessly integrate endless aspects of the real world, including entities such as identity, ownership and financial value.
This open, shared digital space is made possible by advances in virtual reality and blockchain technologies. User-focused tokens play a key role in the metaverse’s operational and economic design. With tokens, anyone can own a slice of the metaverse, along with the value they unlock.
However, even for seasoned crypto traders, investing in any single token can result in exposure to high levels of volatility. While volatility can drive up the average price of a token and create significant returns, it can also result in significant losses in no time at all.
Much like a traditional mutual or index fund, Metaverse Index and the MVI token aim to minimize volatility while supplying stable returns. By representing a variety of hand-picked tokens rather than a single one, MVI turns the growing trend of virtual reality into a single token anyone can invest in.
Advantages of MVI Tokens
MVI tokens let crypto traders profit from developments in metaverse technology by investing in several various metaverse protocols, rather than focusing on a single token, asset or platform. This provides several key benefits for traders and investors alike.
Risk Management
Since holding MVI or another index token offsets the volatility associated with individual tokens, by its very nature Metaverse Index acts as a risk management tool.
Cost Effectiveness
Buying or selling individual tokens requires gas fees for each transaction. Buying or selling MVI, on the other hand, allows you to trade and profit from over a dozen different tokens and protocols while only paying a single gas fee, rather than several.
Simplicity
Metaverse Index makes capturing broad market trends simple. Explicitly based on the concept of the metaverse, MVI offers a simplified, straightforward approach to capturing trends without the need for constant research and portfolio rebalancing.
Transparency
There’s nothing worse than flying blind as a crypto trader, so when it comes to investing your hard-earned money, transparency is a must. Recognizing this need, Metaverse Index employs a transparent set of rules for evaluating tokens for inclusion and exclusion.
MVI Tokenomics
Since MVI is an index product, it lacks tokenomics and there’s no supply or issuance schedule. The token directly represents a mixture of 16 tokens individually allocated according to a specific formula for liquidity weighting and root market cap. Additionally, although MVI doesn’t follow an issuance or supply schedule, it has a maximum supply of 39,602 coins.
Metaverse Index Price Prediction
The current price of MVI is $18.59, marking a 2 percent increase in the past 24 hours. However, the price is down 0.5 percent over the past seven days and 34.9 percent over the past 30 days.
These price swings are even more eye-opening when looking at longer time frames. For example, MVI is down 94.7 percent on the year. At this time last year, MVI was trading at $355.13.
Nonetheless, the question remains: Where will the price of MVI go from here? Currently, the overall sentiment is bearish on the short-term prospects for MVI. In fact, WalletInvestor’s forecast rates the token as a poor investment for at least the next year.
The trading volume for MVI, however, remains strong and healthy. When coupled with the undeniable growth of the metaverse trend, the argument can be made that MVI’s current slump is exactly that — a slump.
In fact, DigitalCoinPrice and many other crypto forecasters have the price of MVI rising consistently over the coming years. According to their analysts, MVI is expected to reach a minimum price of $39.92 in 2023 and a maximum price of $47.13. By 2025, MVI is predicted to reach $82.03, and by 2031, MVI is predicted to hit $358.92.
If these figures are at least somewhat accurate, the trajectory of MVI appears obvious. While it will likely take several years before MVI once again reaches its peak price of $372.65, which it reached in November 2021, the outlook is promising and the price of MVI should climb consistently in the years to come.
Where to Buy Metaverse Index
Investing in Metaverse Index doesn’t take much work. You can purchase MVI directly through Index Coop, the DAO responsible for maintaining some of today’s top crypto indices. As a developer and manager of crypto index funds, Index Coop makes investing in crypto and digital assets easier and less costly than building a crypto portfolio on your own.
As with other tokens, you can purchase MVI with Ether (ETH). It can also be purchased with DAI, USDC, stETH and WETH. If you do not have any of these, you’ll need to buy some from an exchange that accepts bank or debit card deposits, such as Bybit. Once you have the necessary amount of ETH, you can then connect to your digital crypto wallet and exchange it for MVI. That’s really all there is to it.
Is MVI a Safe Investment?
Based on present data and all of the information above, Metaverse Index (MVI) — and the greater market environment — have been trending downward over the past 12 months. According to several sources, however, MVI’s future outlook is positive, with steady gains expected over the next 10 years.
That said, given the drastic falloff from its all-time high of $372.65 just a year ago, it’s difficult to view MVI as a safe investment, especially for the short term. As a long-term investment or value play, on the other hand, MVI may be worth a look.
The Bottom Line
Metaverse Index has demonstrated the ability to completely change the way people engage and interact with the concept of the metaverse. The platform combines several of the top metaverse platforms and tokens into a single basket, allowing crypto traders and metaverse enthusiasts to invest in the metaverse trend rather than in a single token. Its methodology just makes sense. If you want to take a hands-off approach to the crypto markets and potentially profit while mitigating risks, Metaverse Index is worth checking out.